The flag of South Korean steelmaker POSCO (Yonhap)
SEJONG, Aug. 25 (Korea Bizwire) – POSCO Future M, the battery materials arm of the POSCO Group, is set to divest its entire stake in P&O Chemical, a joint venture with OCI, effectively exiting the business.
According to industry insiders, POSCO Future M’s board is expected to meet on August 26 to approve the sale of its 51% stake in P&O Chemical to OCI, its joint venture partner. OCI’s board is also scheduled to convene on the same day to ratify the acquisition.
P&O Chemical, a venture between POSCO Future M and OCI, holds 51% and 49% stakes, respectively. The company had been gearing up to produce pitch, a material critical for coating cathode materials used in secondary batteries.
Pitch is derived from processing by-products like coal tar and residual sulfur, which are produced during coal or petroleum refining. It serves as a coating for battery cathode materials and as a raw material for electrode rods used in steel mills.
Industry estimates suggest that POSCO Future M will secure approximately 50 billion won from the stake sale, alongside an estimated 150 billion won in financial improvement through debt transfer.
The move is seen as part of POSCO Future M’s broader strategy to restructure its operations by shedding low-profit businesses. P&O Chemical, which is on the brink of launching its pitch production in earnest, reported a net loss of 67.1 billion won last year.
This year, under the leadership of Chairman Jang In-hwa, POSCO Group has embarked on a significant restructuring initiative aimed at divesting unprofitable businesses and non-core assets. The stake sale in P&O Chemical is expected to further accelerate these efforts.
On July 12, POSCO Holdings outlined its strategic direction for enhancing corporate value, announcing that it had finalized 120 restructuring plans.
By 2026, the group expects to complete over 97% of these targets, generating a cash inflow of approximately 2.6 trillion won. The proceeds are intended for reinvestment in the group’s core businesses and to be returned to shareholders.
POSCO Group faces intensifying competition in its core steel business due to global oversupply, particularly from China.
Additionally, profitability in the secondary battery materials sector, seen as the next growth industry, has been challenged by a temporary slowdown in demand from the electric vehicle industry.
In this context, POSCO Group is undertaking aggressive structural reforms to raise capital for large-scale projects, including the development of hydrogen reduction steel technology.
M. H. Lee (mhlee@koreabizwire.com)
